Kyle Prevost, creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course, summarizes major financial headlines and explains what they mean for Canadian investors.
Can’t stop the Nvidia train
Nvidia has surged into the position of the world’s largest public company, fueled by extraordinary profit growth and relentless demand for its AI-focused semiconductors. The company continues to beat revenue and earnings expectations quarter after quarter—so much so that its results are becoming events in their own right. Even when shares dipped modestly after the latest report, Nvidia remained well into 2024 gains, reflecting investor appetite for its chips that power large-scale AI applications.
Nvidia earnings highlights
All figures shown in U.S. dollars.
- Nvidia (NVDA/NASDAQ): Earnings per share: $0.81 (consensus: $0.75). Revenue: $35.08 billion (consensus: $33.16 billion).
The company’s data centre business is the clear driver, generating nearly $31 billion in revenue for the quarter. Other divisions—gaming and autonomous-vehicle chips—remain meaningful but much smaller, with gaming around $3.28 billion and automotive near $449 million. Nvidia’s gross margin expanded to roughly 73.5%, a striking contrast with many large retailers and traditional companies.
CEO Jensen Huang has emphasized how broadly Nvidia’s products are being adopted across industries. Newer chips, such as the Blackwell architecture, are already shipping to major AI customers and face supply constraints in the near term, suggesting demand will likely outpace production capacity for several quarters. That dynamic—very high demand, limited near-term supply, and strong profitability—helps explain why investors are valuing Nvidia at exceptional levels.
Comparisons to past market bubbles often surface when a single stock dominates headlines, but Nvidia’s case differs because the company is generating enormous, rising profits. For perspective, its quarterly profit far exceeds what many earlier speculative stories ever produced. Still, estimating a “fair value” for a company growing this fast is difficult, and much depends on whether competitors can chip away at its market share going forward.
Key takeaways: Nvidia’s fundamentals and AI tailwinds are powerful right now, but rapid price appreciation raises questions about long-term valuation and competition.
Food and shelter continue to drive inflation
After a period of easing fuel prices that helped lower inflation in September, Statistics Canada reported that the annual consumer price index (CPI) rose from 1.6% in September to 2.0% in October. That increase reflects rising costs for items that make up a large portion of household spending—most notably shelter and food.
Shelter accounts for about 28.6% of the CPI basket and was a major contributor to the uptick, while food now represents roughly 16.7% and saw notable price increases. Other categories, such as clothing and certain transportation costs, are not pushing inflation higher, but the combined effect of shelter and food is enough to lift the overall rate.
| CPI items | September 2024 | October 2024 |
|---|---|---|
| All | 1.6% | 2.0% |
| Food | 2.8% | 3.0% |
| Shelter | 5.0% | 4.8% |
| Household operations, furnishings and equipment | -0.2% | -0.1% |
| Clothing and footwear | -4.4% | -2.3% |
| Transportation | -1.5% | 0.2% |
| Health and personal care | 3.1% | 3.1% |
| Recreation, education and reading | 0.0% | -0.9% |
| Alcoholic beverages, tobacco products and recreational cannabis | 3.0% | 3.0% |
The divergence between goods and services remains significant: prices for services rose at an annualized rate of about 3.6% in October, while goods increased only 0.1%. Property taxes—recalculated each October—also contributed to the rise, showing a notable year-over-year increase.
For monetary policy, this means the Bank of Canada may find it harder to justify aggressive rate cuts if inflation does not continue to retreat. Persistent price pressure in key areas like shelter and food could keep interest rates higher for longer than markets previously expected.
Missing the Target
Retail earnings this week delivered a surprise: Target reported a large earnings miss and an inventory problem that sent its shares sharply lower. The company said it faced weak demand in discretionary categories and higher shipping costs tied to expedited shipments ahead of a port disruption—factors that contributed to excess stock and unexpected expenses.
American retailer earnings highlights
Figures in U.S. dollars.
- Walmart (WMT/NYSE): EPS: $0.58 (consensus: $0.53). Revenue: $169.59 billion (consensus: $167.72 billion).
- Target (TGT/NYSE): EPS: $1.85 (consensus: $2.30). Revenue: $25.45 billion (consensus: $25.21 billion).
- Lowe’s (LOW/NYSE): EPS: $2.89 (consensus: $2.82). Revenue: $23.59 billion (consensus: $23.91 billion).
Walmart, by contrast, reported another solid quarter and illustrated why scale and category mix matter. Grocery sales make up a much larger share of Walmart’s U.S. business than Target’s, and essentials-focused retail tends to hold up better when consumers are price-sensitive. Walmart’s online sales growth also outpaced Target’s, underscoring its growing digital strength.
Lowe’s beat earnings expectations but missed slightly on revenue. Management noted that some customers are postponing home-improvement projects while borrowing costs remain elevated, and they expect activity to pick up once rates fall.
Grocery stocks are way up this year
Grocery retailers have outperformed broader markets in 2024 after several tougher years. Two of Canada’s largest chains reported results that modestly exceeded forecasts, though both saw small share-price reactions following their announcements.
Canadian grocer earnings highlights
Reported results for the latest quarter.
- George Weston (WN/TSE): EPS: $3.57 (consensus: $3.44). Revenue: $18.71 billion (consensus: $18.68 billion).
- Metro (MRU/TSE): EPS: $1.02 (consensus: $0.99). Revenue: $4.94 billion (consensus: $4.87 billion).
Metro is wrapping up a major investment in its supply chain—about $1 billion—intended to modernize distribution and support future growth and efficiency. Management expects the improvements to strengthen the company’s market position over the long term. A labour dispute earlier in the year did have a one-time cost impact on earnings.
George Weston’s Loblaw segment posted modest revenue gains. One of Weston’s real-estate subsidiaries reported higher operating results driven by rising rents in retail and industrial properties, but accounting adjustments related to tax items produced a one-time decline in other comprehensive income. That adjustment was largely anticipated by analysts and did not trigger major market volatility.
Year to date, George Weston’s shares have outperformed, rising roughly in the low-to-mid 30 percent range, while Metro’s share price is also notably higher this year.
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